The Government Pension Investment Fund (GPIF), Japan’s public pension fund and the world’s largest, logged its worst investment performance in three years in July-September, losing $48 billion, with a rate of return of minus 3.32 percent. Japanese corporate pension funds have 60-70 trillion yen ($744-$868 billion) of assets under management, with nearly 5 percent allocated to hedge funds, according to the Pension Fund Association.Ĭorporate pension funds only really started to put money into hedge funds in 2005, looking to improve on an annual return of 3-5 percent due to ultra-low interest rates in Japan and a prolonged slump in domestic share prices.ĪIJ had told prospective clients it delivered cumulative returns of up to 240 percent, according to local media. We fear pension funds would withdraw from alternatives, including hedge funds, especially from small and mid-sized hedge funds like us,” said an executive at one Japanese hedge fund, who asked not to be identified due to the sensitivity of the issue. “This is definitely negative for the industry. On Friday, Japan’s financial regulator shut down AIJ for a month amid suspicion it may have hidden losses in the $2.6 billion pension funds it managed. Hedge fund industry sources said they feared the scandal could drive Japan’s pension funds away from hedge fund investments, dealing a blow especially to independent and small-scale funds that look after less than 5 percent of the nation’s around $800 billion in company pensions. Feb 27 (Reuters) - A mood of fear and nervousness hung over Japan’s hedge fund industry on Monday as regulators widened an investigation into the suspected disappearance of more than $2 billion in corporate pension funds managed by Tokyo-based AIJ Investment Advisors Co.
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